Pro-Dex(PDEX) - 2025 Q4 - Annual Report

PART I ITEM 1. BUSINESS Pro-Dex designs and manufactures surgical drivers and shavers for medical markets, with high customer concentration and strong sales growth Company Overview Pro-Dex, Inc. specializes in the design, development, and manufacturing of autoclavable, battery-powered, and electric multi-function surgical drivers and shavers for orthopedic, thoracic, and craniomaxillofacial (CMF) markets - Pro-Dex, Inc. specializes in the design, development, and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers for orthopedic, thoracic, and craniomaxillofacial (CMF) markets[21] - The company's patented adaptive torque-limiting technology is well-received in CMF and thoracic markets, with ongoing R&D to apply it to other surgical applications[22] - A new 25,000 sq ft facility in Tustin, California, fully operational in fiscal 2023, provides additional capacity for expected future growth[23] Description of Business The majority of Pro-Dex's revenue is derived from designing, developing, and manufacturing surgical devices for the medical device industry - The majority of revenue is from designing, developing, and manufacturing surgical devices for the medical device industry[26] Sales by Product/Service Type (Fiscal Years Ended June 30) | Product/Service Type | 2025 Sales (thousands) | 2025 % of Revenue | 2024 Sales (thousands) | 2024 % of Revenue | | :------------------- | :--------------------- | :---------------- | :--------------------- | :---------------- | | Medical devices | $47,747 | 72% | $36,979 | 69% | | Industrial and scientific | $861 | 1% | $765 | 1% | | NRE & Prototypes | $698 | 1% | $786 | 1% | | Dental and component | $194 | — | $201 | — | | Repairs | $18,586 | 28% | $16,505 | 31% | | Discounts & Other | $(1,493) | (2%) | $(1,392) | (2%) | | Total Sales | $66,593 | 100% | $53,844 | 100% | - Customer concentration is high, with the top three customers accounting for 94% of sales in fiscal 2025 (up from 88% in fiscal 2024), and the largest customer alone representing 75% (up from 71%)[27] - The company's largest customer launched its next-generation handpiece in fiscal 2025, and Pro-Dex resumed production and shipments late in Q4 fiscal 2025 after a temporary hold[28] - Backlog increased from $19.8 million at June 30, 2024, to $50.4 million at June 30, 2025, with most expected to be delivered in fiscal 2026[33] Segments Pro-Dex operates as a single operating segment, primarily focused on designing, manufacturing, and repairing medical devices - Pro-Dex operates as a single operating segment, as 99% of its fiscal 2025 business relates to designing, manufacturing, and repairing medical devices[34] - The CEO manages the business as one segment, allocating resources and assessing performance based on consolidated operating income[34] Competition The company faces intense competition from major medical device companies and customers' internal development and manufacturing groups - The company faces intense competition from major medical device companies and customers' internal development and manufacturing groups[35][36] - Competitors often have greater name recognition and substantially larger financial, technical, product development, and marketing resources[35] Research and Development R&D activities focus on expanding knowledge, advancing technologies, and introducing new or enhanced medical device products - R&D activities focus on expanding knowledge in the medical device industry, advancing technologies, introducing new products, and enhancing existing product lines[37][42] Research and Development Expenses (Fiscal Years Ended June 30) | Metric | 2025 (millions) | 2024 (millions) | Change YoY | | :----- | :-------------- | :-------------- | :--------- | | R&D Expenses | $3.6 | $3.2 | +12.5% | | Reimbursed R&D Expenses | $0.073 | $0.224 | -67.4% | - Revenue from Non-Recurring Engineering (NRE) services, where R&D costs are shared with customers, represented 1% of total revenue in both fiscal 2025 and 2024[37] Human Capital Management The company's success relies on attracting, rewarding, retaining, and developing talent across all organizational levels - The company's success relies on attracting, rewarding, retaining, and developing talent across all organizational levels[39] - Employee benefits include competitive compensation, comprehensive health and welfare benefits, a 401(k) plan, an Employee Stock Purchase Plan, equity compensation, flexible paid time off, and education/tuition reimbursement[40][43] Employee Data (Fiscal Years Ended June 30) | Metric | 2025 | 2024 | Change YoY | | :----- | :--- | :--- | :--------- | | Employees | 181 | 148 | +22.3% | | Turnover Rate | 16% | 21% | -5 percentage points | Government Regulations The manufacture and distribution of medical devices are subject to complex state and federal regulations, including those from the FDA and EPA - The manufacture and distribution of medical devices are subject to complex state and federal regulations, including those from the FDA and EPA[44][47] - Surgical instrumentation manufactured by Pro-Dex is generally classified as Class I by the FDA, requiring the lowest level of control[45] - Both Irvine and Tustin facilities comply with FDA Establishment Registration, State of California Device Manufacturing License, ISO 13485:2016, and Medical Device Directive 93/42/EEC – Annex II[32][48] Patents, Trademarks, and Licensing Agreements Pro-Dex holds US and foreign patents related to its handheld medical devices and torque-limiting screwdrivers, along with federally registered trademarks - Pro-Dex holds US and foreign patents related to its handheld medical devices and torque-limiting screwdrivers, with varying expiration dates[49] - The company believes its operations do not infringe on third-party intellectual property and that its patents cover certain aspects of its products[50] - Federally registered trademarks include 'Pro-Dex' and other common law trademarks[51] ITEM 1A. RISK FACTORS Pro-Dex faces significant risks from customer concentration, intense competition, technology, operations, finance, and regulatory compliance - A substantial portion of revenue (94% in fiscal 2025) is derived from a few customers, with the largest customer accounting for 75% of sales, posing a significant risk if these relationships are lost or reduced[53] - The company operates in intensely competitive markets, facing larger competitors with greater resources and internal development groups of its customers[60][61] - Reliance on proprietary technology and patents means that failure to protect them or claims of infringement could materially adversely affect the business[64][65] - Cybersecurity incidents, data breaches, or technology infrastructure disruptions could adversely affect operations, customer service, and financial condition[66][68] - The company's debt obligations impose restrictions on business activities and require significant cash generation, which depends on factors beyond its control[70][93] - Material weaknesses in internal control over financial reporting were identified in fiscal 2024 and 2023, related to inventory accounting and investment valuation, which have been subject to remediation plans[97][98] - Global economic conditions, including inflation, interest rates, and tariffs, could negatively impact customer funding, sales, costs, and margins[102][103] Risks Related to Our Business and the Industry in Which We Operate The company faces risks related to customer concentration, product development, competition, intellectual property, and financial stability - A significant portion of revenue (94% in fiscal 2025) comes from a few customers, with the largest customer accounting for 75% of sales, creating high dependence[53] - The core business, medical device products and services, generated 99% of revenue in fiscal 2025, requiring continuous product development and market acceptance[54][55] - Customers can cancel or reduce orders with little notice, leading to forecasting difficulties, increased inventory, and potential write-offs[56][58] - Warranty claims for new medical device products, if exceeding estimates based on legacy products, could adversely affect financial results[59] - The medical device market is characterized by rapid technological change, requiring significant R&D investment to avoid product obsolescence[62][63] - Reliance on proprietary technology (patents, agreements) means misappropriation or infringement claims could lead to significant legal costs and adverse business impacts[64][65] - Cybersecurity incidents, data breaches, or system interruptions could result in business disruption, financial liability, and reputational damage[67][68] - The company's ability to service debt and fund operations depends on future cash generation, which is subject to economic and other factors beyond its control[70][71] - Holding cash balances with a single financial institution exposes the company to banking institution risks, including potential loss of access to deposits[72][73] - Investments in marketable securities are subject to valuation changes and potential losses, which could adversely affect financial condition[74] - Dependence on key personnel and the ability to attract and retain talent is critical, with loss of key employees potentially having a material adverse effect[75][76] - Future business acquisitions may pose integration challenges and risks to realizing expected value[77][78] - Past operating losses and the need for additional capital in the future, which may not be available on acceptable terms, could limit growth opportunities[79][80] Risks Related to Ownership of Our Common Stock Ownership of common stock carries risks related to significant director control and potential stock price volatility due to fluctuating quarterly results - Two directors control approximately 39% of outstanding common stock (Nicholas J. Swenson 31%, Raymond E. Cabillot 8%), giving them significant influence over shareholder matters[81][82] - Quarterly results can fluctuate significantly due to factors like customer order timing, new product cycles, pricing changes, and fixed expenses, making interim comparisons unreliable[83][84] - Operating results below market expectations could negatively impact the common stock price[86] Regulatory & Compliance Risks The company faces complex government regulations, potential litigation, debt covenants, and risks from changes in accounting standards and internal control weaknesses - Operations are subject to complex government regulations (FDA, EPA), and non-compliance could lead to administrative warnings, business termination, or significant costs[87][88] - Potential litigation, including product performance, warranty, patent infringement, and environmental remediation claims, could result in significant legal costs, diversion of management attention, and adverse business impacts[90][91][92] - Debt agreements impose covenants restricting actions such as incurring additional debt, paying dividends, creating liens, or pursuing strategic acquisitions, which could limit business flexibility[93][100] - Changes in financial accounting standards and interpretations could lead to costly and time-consuming compliance efforts and potential restatements[96] - Previous material weaknesses in internal control over financial reporting (inventory accounting, investment valuation) required remediation and future weaknesses could harm financial statements and stock price[97][98][99] General Risks Global economic conditions, including credit market tightening, inflation, interest rates, and tariffs, can negatively impact the company's financial condition - The global economic environment, including credit market tightening, liquidity issues, inflation, and interest rates, can negatively impact customer purchases and the company's financial condition[102] - Increased tariffs on U.S. imports, particularly on raw materials and components from foreign countries, pose a risk of higher costs and reduced margins if not passed on to customers or mitigated by alternative sourcing[103] ITEM 1B. UNRESOLVED STAFF COMMENTS The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[104] ITEM 1C. CYBERSECURITY Pro-Dex manages cybersecurity risks through robust processes and Board oversight, with no material incidents reported - The company implements information security processes to identify, assess, manage, and protect against cybersecurity threats to critical networks and data[105] - Measures include incident detection/response, disaster recovery, network security, access controls, system monitoring, cybersecurity insurance, and employee training[106] - The Chief Financial Officer manages risk assessment and mitigation with third-party IT partners, and a new business systems and IT manager was hired in fiscal 2025 to enhance in-house expertise[107] - Cybersecurity risks are overseen by the full Board of Directors and the Audit Committee[108] - No cybersecurity incidents or threats have materially affected the company's business strategy, results of operations, or financial condition to date[109] ITEM 2. PROPERTIES Pro-Dex operates two adequate and compliant facilities in California for manufacturing, assembly, and repairs - Executive offices and manufacturing are located in a 28,000 sq ft leased facility in Irvine, California, with the lease expiring in September 2027[110] - The Franklin Property, a 25,000 sq ft owned facility in Tustin, California, is primarily used for assembly and repairs operations[111] - Both facilities are considered adequate for current and future needs and comply with applicable state, EPA, and other environmental standards[112] ITEM 3. LEGAL PROCEEDINGS Information regarding legal proceedings is incorporated by reference to Note 10 of the consolidated financial statements - Legal proceedings information is detailed in Note 10 to the consolidated financial statements[113] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to Pro-Dex, Inc. - Mine Safety Disclosures are not applicable to the registrant[114] PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Pro-Dex common stock trades on Nasdaq, retains earnings for operations and repurchases, and has never paid dividends - Pro-Dex common stock is quoted on the Nasdaq Capital Market under the symbol 'PDEX'[116] - As of September 2, 2025, there were 131 holders of record for the common stock[117] - The company has never paid cash dividends and plans to retain future earnings for operations, expansion, or stock repurchases, with current credit facilities prohibiting dividend payments[118] Common Stock Repurchases (Fiscal Years Ended June 30) | Fiscal Year | Shares Repurchased | Aggregate Cost (millions) | | :---------- | :----------------- | :------------------------ | | 2025 | 0 | $0 | | 2024 | 88,011 | $1.7 | ITEM 6. RESERVED This item is reserved and contains no information - Item 6 is reserved[120] ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Pro-Dex reported significant sales and net income growth in fiscal 2025, with negative operating cash flow but sufficient liquidity Consolidated Income Statement Highlights (Fiscal Years Ended June 30) | Metric | 2025 (thousands) | 2024 (thousands) | Change YoY | | :----------------------------- | :--------------- | :--------------- | :--------- | | Net sales | $66,593 | $53,844 | +24% | | Gross profit | $19,510 | $14,551 | +34% | | Operating income | $10,689 | $7,173 | +49% | | Income before income taxes | $12,058 | $2,634 | +358% | | Net income | $8,978 | $2,127 | +322% | | Basic net income per share | $2.73 | $0.61 | +348% | | Diluted net income per share | $2.67 | $0.60 | +345% | Cash Flow and Working Capital (Fiscal Years Ended June 30) | Metric | 2025 (thousands) | 2024 (thousands) | | :-------------------------- | :--------------- | :--------------- | | Cash provided by (used in) operating activities | $(1,682) | $6,224 | | Cash provided by (used in) investing activities | $(238) | $(2,233) | | Cash provided by (used in) financing activities | $(292) | $(4,296) | | Cash and cash equivalents | $419 | $2,631 | | Working capital | $32,666 | $23,719 | - Cash used in operating activities in fiscal 2025 was $1.7 million, primarily due to a $6.9 million increase in inventory and a $2.5 million increase in accounts receivable, anticipating increased sales[150] - The company believes existing cash, receivables, and anticipated cash flows, along with available credit ($7.3 million from revolving loan), will provide sufficient funds for the next 12 months[156] Overview Pro-Dex specializes in designing, developing, and manufacturing autoclavable, battery-powered, and electric multi-function surgical drivers and shavers for medical markets - Pro-Dex specializes in designing, developing, and manufacturing autoclavable, battery-powered, and electric multi-function surgical drivers and shavers for orthopedic, thoracic, and CMF markets[123] - The company also provides engineering, quality, and regulatory consulting services and sells rotary air motors, which are a de minimis portion of the business[123] Critical Accounting Policies and Estimates Financial statements are prepared in accordance with U.S. GAAP, requiring management estimates and judgments for various financial items - Financial statements are prepared in accordance with U.S. GAAP, requiring management estimates and judgments for assets, liabilities, revenues, and expenses[124] - Revenue from product sales is recognized at the point of sale or delivery, while NRE and prototype services revenue is typically recognized over time[125] - Inventories are valued at the lower of cost (FIFO) or net realizable value, with reductions recorded for obsolescence or slow-moving items[127] - Investments in marketable equity securities are marked to market at each measurement date, with unrealized gains and losses presented in other income (expense)[128] - Long-lived assets (building, equipment, improvements) are recorded at historical cost and depreciated using the straight-line method over their estimated useful lives[129] - Deferred tax assets and liabilities are recognized for temporary differences, requiring significant management judgment regarding recoverability based on future taxable income[130][131] Results of Operations for the Fiscal Year Ended June 30, 2025 Compared to the Fiscal Year Ended June 30, 2024 Pro-Dex reported a significant increase in net sales and net income in fiscal 2025, driven by medical device sales and improved other income Consolidated Income Statement (Fiscal Years Ended June 30) | | 2025 (thousands) | % of Net Sales | 2024 (thousands) | % of Net Sales | | :----------------------------- | :--------------- | :------------- | :--------------- | :------------- | | Net sales | $66,593 | 100% | $53,844 | 100% | | Cost of sales | $47,083 | 71% | $39,293 | 73% | | Gross profit | $19,510 | 29% | $14,551 | 27% | | Selling expenses | $344 | — | $117 | — | | General and administrative expenses | $4,841 | 7% | $4,072 | 8% | | Research and development costs | $3,636 | 6% | $3,189 | 6% | | Total operating expenses | $8,821 | 13% | $7,378 | 14% | | Operating income | $10,689 | 16% | $7,173 | 13% | | Other income (expense), net | $1,369 | 2% | $(4,539) | (8%) | | Income before income taxes | $12,058 | 18% | $2,634 | 5% | | Income tax expense | $3,080 | 5% | $507 | 1% | | Net income | $8,978 | 13% | $2,127 | 4% | - Net sales increased by $12.7 million (24%) in fiscal 2025, primarily due to a $10.8 million increase in medical device revenue and a $2.1 million increase in repair revenue[135] Medical Device Sales by Type (Fiscal Years Ended June 30) | Medical Device Sales | 2025 (thousands) | 2025 % of Net Sales | 2024 (thousands) | 2024 % of Net Sales | Increase (Decrease) From 2024 To 2025 | | :------------------- | :--------------- | :------------------ | :--------------- | :------------------ | :------------------------------------ | | Orthopedic | $33,542 | 70% | $23,630 | 64% | 42% | | CMF | $9,943 | 21% | $10,334 | 28% | (4%) | | Thoracic | $4,262 | 9% | $3,015 | 8% | 41% | | Total | $47,747 | 100% | $36,979 | 100% | 29% | - Medical device revenue to the largest customer, included in orthopedic sales, increased by $10.1 million due to the launch of their next-generation handpiece[135] - Cost of sales increased by $7.8 million (20%) in fiscal 2025, consistent with the increase in net sales, and included $2.5 million of under-absorption of manufacturing costs[140] - Selling expenses increased by $227,000 (194%) due to recruiting fees, personnel costs for a new Director of Business Development, and increased advertising[141] - General and administrative expenses increased by $769,000 (19%) due to higher bonus accruals, personnel costs, and legal/IT expenses, partially offset by decreased audit fees[142] - Research and development costs increased by $447,000 (14%) due to increased spending on internal product development projects[143] - Other income (expense) shifted from a net expense of $4.5 million in fiscal 2024 to a net income of $1.4 million in fiscal 2025, primarily due to a $1.5 million unrealized gain on marketable equity investments (vs. $4.1 million unrealized loss in 2024) and a $595,000 gain on sale of investments[133][145][146] - The effective tax rate increased from 19% in fiscal 2024 to 26% in fiscal 2025, slightly less than the statutory rate due to federal and state research credits[148] Liquidity and Capital Resources Pro-Dex experienced negative cash flow from operations in fiscal 2025 due to increased inventory and accounts receivable, but maintains sufficient liquidity with available credit Cash Flow Summary (Fiscal Years Ended June 30) | Cash Flow Activity | 2025 (thousands) | 2024 (thousands) | | :----------------- | :--------------- | :--------------- | | Operating activities | $(1,682) | $6,224 | | Investing activities | $(238) | $(2,233) | | Financing activities | $(292) | $(4,296) | - Cash used in operating activities in fiscal 2025 was $1.7 million, primarily due to a $6.9 million increase in inventory and a $2.5 million increase in accounts receivable, in anticipation of increased sales[150] - Net cash used in investing activities was $238,000 in fiscal 2025, including $1.2 million in capital expenditures and $899,000 for Monogram Technologies, Inc. warrants, offset by $1.9 million from investment sales[152] - Net cash used in financing activities was $292,000 in fiscal 2025, including $3.5 million in net borrowings on notes payable, offset by $3.5 million for common stock repurchases and $305,000 for employee payroll taxes on stock awards[154] - Working capital was $32.7 million as of June 30, 2025. The company expects existing cash, receivables, and anticipated cash flows to be sufficient for the next 12 months, with $7.3 million available under its revolving loan[156] - The Board-approved Surplus Capital Investment Policy guides investments of surplus capital, managed by an Investment Committee[159] - Under share repurchase programs, 130,148 shares were repurchased for $3.5 million in fiscal 2025, and 184,901 shares for $3.5 million in fiscal 2024[161] ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Pro-Dex, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide quantitative and qualitative disclosures about market risk as it is a smaller reporting company[162] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section presents audited consolidated financial statements for fiscal 2025 and 2024, with an unqualified opinion - The consolidated financial statements for fiscal years ended June 30, 2025 and 2024, are presented, including balance sheets, income statements, statements of shareholders' equity, and cash flows[165] - Baker Tilly US, LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements[167] - No critical audit matters were identified by the independent auditors[171] Report of Independent Registered Public Accounting Firm Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements for fiscal years 2025 and 2024 - Baker Tilly US, LLP provided an unqualified opinion, stating that the consolidated financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows for the years ended June 30, 2025 and 2024[167] - The audit was conducted in accordance with PCAOB standards, and no audit of internal control over financial reporting was performed[169] - No critical audit matters were identified for the current period audit[171] Consolidated Balance Sheets The consolidated balance sheets show an increase in total assets, liabilities, and shareholders' equity from fiscal 2024 to 2025 Consolidated Balance Sheets (In thousands, except share data) | ASSETS | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Cash and cash equivalents | $419 | $2,631 | | Investments | $6,740 | $4,217 | | Accounts receivable | $16,433 | $13,887 | | Inventory | $22,213 | $15,269 | | Total current assets | $47,295 | $36,611 | | Land and building, net | $6,061 | $6,155 | | Equipment and improvements, net | $5,153 | $5,024 | | Total assets | $61,192 | $52,477 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Accounts payable | $4,614 | $4,513 | | Notes payable (current) | $6,148 | $4,374 | | Total current liabilities | $14,629 | $12,892 | | Notes payable (non-current) | $9,246 | $7,536 | | Total liabilities | $24,560 | $21,610 | | Total shareholders' equity | $36,632 | $30,867 | | Total liabilities and shareholders' equity | $61,192 | $52,477 | - Total assets increased by $8.7 million (16.6%) from $52.5 million in 2024 to $61.2 million in 2025[174] - Total liabilities increased by $2.95 million (13.7%) from $21.6 million in 2024 to $24.6 million in 2025[174] - Total shareholders' equity increased by $5.76 million (18.7%) from $30.9 million in 2024 to $36.6 million in 2025[174] Consolidated Income Statements The consolidated income statements show a significant increase in net income and diluted EPS for fiscal 2025 compared to fiscal 2024 Consolidated Income Statements (In thousands, except share and per share data) | | Years Ended June 30, 2025 | Years Ended June 30, 2024 | | :--------------------------------------- | :------------------------ | :------------------------ | | Net sales | $66,593 | $53,844 | | Cost of sales | $47,083 | $39,293 | | Gross profit | $19,510 | $14,551 | | Total operating expenses | $8,821 | $7,378 | | Operating income | $10,689 | $7,173 | | Total other income (expense) | $1,369 | $(4,539) | | Income before income taxes | $12,058 | $2,634 | | Income tax expense | $(3,080) | $(507) | | Net income | $8,978 | $2,127 | | Basic net income per share | $2.73 | $0.61 | | Diluted net income per share | $2.67 | $0.60 | | Weighted-average common shares outstanding (Basic) | 3,287,844 | 3,498,807 | | Weighted-average common shares outstanding (Diluted) | 3,361,207 | 3,571,207 | - Net income increased significantly from $2.1 million in fiscal 2024 to $9.0 million in fiscal 2025, a 322% increase[176] - Diluted EPS increased from $0.60 in fiscal 2024 to $2.67 in fiscal 2025[176] Consolidated Statements of Shareholders' Equity Total shareholders' equity increased in fiscal 2025 due to net income, partially offset by share repurchases, leading to a decrease in common shares outstanding Consolidated Statements of Shareholders' Equity (In thousands, except share data) | | Common Shares (Number) | Common Shares (Amount) | Retained Earnings | Total Shareholders' Equity | | :--------------------------------------- | :--------------------- | :--------------------- | :---------------- | :------------------------- | | Balance at June 30, 2023 | 3,545,309 | $6,767 | $24,823 | $31,590 | | Net income | — | — | $2,127 | $2,127 | | Share repurchases | (184,901) | $(3,505) | — | $(3,505) | | Balance at June 30, 2024 | 3,363,412 | $3,917 | $26,950 | $30,867 | | Net income | — | — | $8,978 | $8,978 | | Share repurchases | (130,148) | $(3,504) | — | $(3,504) | | Balance at June 30, 2025 | 3,261,043 | $704 | $35,928 | $36,632 | - Total shareholders' equity increased from $30.9 million in fiscal 2024 to $36.6 million in fiscal 2025, primarily due to net income of $9.0 million, partially offset by $3.5 million in share repurchases[179] - The number of common shares outstanding decreased from 3,363,412 at June 30, 2024, to 3,261,043 at June 30, 2025, mainly due to share repurchases[179] Consolidated Statements of Cash Flows Operating activities used cash in fiscal 2025, a significant shift from providing cash in fiscal 2024, primarily due to increased inventory and accounts receivable Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Years Ended June 30, 2025 | Years Ended June 30, 2024 | | :--------------------------------------- | :------------------------ | :------------------------ | | Net cash provided by (used in) operating activities | $(1,682) | $6,224 | | Net cash used in investing activities | $(238) | $(2,233) | | Net cash used in financing activities | $(292) | $(4,296) | | Net decrease in cash and cash equivalents | $(2,212) | $(305) | | Cash and cash equivalents, end of year | $419 | $2,631 | - Operating activities used $1.7 million in cash in fiscal 2025, a significant change from providing $6.2 million in fiscal 2024, mainly due to increased inventory and accounts receivable[182][150] - Investing activities used $238,000 in fiscal 2025, a decrease from $2.2 million in fiscal 2024, due to proceeds from investment sales offsetting capital expenditures and Monogram warrant exercises[182][152] - Financing activities used $292,000 in fiscal 2025, down from $4.3 million in fiscal 2024, reflecting net borrowings on notes payable offsetting share repurchases and employee tax payments[182][154] - Cash paid for interest increased from $555,000 in fiscal 2024 to $818,000 in fiscal 2025[184] - Total income tax payments increased from $1.9 million in fiscal 2024 to $4.5 million in fiscal 2025[184] Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, offering further information on various accounting policies and financial items ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting and financial disclosure matters - There are no changes in or disagreements with accountants on accounting and financial disclosure[299] ITEM 9A. CONTROLS AND PROCEDURES Management concluded disclosure controls and internal control over financial reporting were effective as of June 30, 2025 - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[300] - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on the 2013 COSO framework[301] - Remediation measures for the material weakness in inventory controls included hiring a warehouse manager, continuing robust cycle counts, ensuring adequate review, and providing training[305] - No changes in internal controls over financial reporting materially affected or are reasonably likely to materially affect controls during the quarter ended June 30, 2025[306] ITEM 9B. OTHER INFORMATION No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[307] ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS There are no disclosures regarding foreign jurisdictions that prevent inspections - There are no disclosures regarding foreign jurisdictions that prevent inspections[308] PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement[311] ITEM 11. EXECUTIVE COMPENSATION Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders - Information on executive compensation is incorporated by reference from the 2025 Proxy Statement[312] ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders - Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2025 Proxy Statement[313] ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement[314] ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information regarding principal accountant fees and services is incorporated by reference from the company's definitive Proxy Statement for its 2025 Annual Meeting of Shareholders - Information on principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement[315] PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES This section lists financial statements and a comprehensive index of exhibits, including corporate documents and agreements - Financial statements are listed in the index under Item 8 of this report[317] - A detailed list of exhibits, including articles of incorporation, bylaws, lease agreements, credit agreements, and various certifications, is provided[318][319][320] ITEM 16. FORM 10–K SUMMARY This item indicates that no Form 10-K summary is provided - No Form 10-K summary is provided[321] SIGNATURES The Form 10-K report is signed by Pro-Dex, Inc.'s President, CEO, CFO, and other directors - The report is signed by Richard L. Van Kirk (President, CEO, and Director) and Alisha K. Charlton (CFO), along with other directors[323][325][327] - The signing date for the report is September 4, 2025[323][327] INDEX TO EXHIBITS This section provides a comprehensive index of all exhibits filed with the Form 10-K, detailing descriptions and filing data - The index lists all exhibits, including Articles of Incorporation, Bylaws, Lease agreements, Credit Agreements, and various certifications[329][330][333] - Exhibits are categorized by number and description, with references to their original SEC filing forms and dates[329][330][333]